Legal interpretation may erase university pension glitch

Students walk past the Alma Mater statue, a landmark on the University of Illinois campus, April 28 in Urbana. Public universities in Illinois are bracing for waves or retirements because a state pension-reform law will sharply cut their retirement funds.

CHAMPAIGN – A troublesome piece of last year’s state pension-reform law may not cut university retirees’ pensions after all, the State Universities Retirement System now says.

The retirement system and state universities complained last month that language in the law would inadvertently reduce many university employees’ pensions. The universities said the problem was adding to already large numbers of faculty and staff considering retiring early to avoid other pension cuts in the law.

But retirement system Executive Director William Mabe said Tuesday that the language in the law should not be interpreted as saying it would cost retirees a year of pension because that wasn’t the intent, according to The News-Gazette. That is based on the Illinois Teachers Retirement System’s interpretation of the law.

The Teachers Retirement System represents 390,000 public school teachers and other employees. The system’s attorneys point to a past Illinois Supreme Court decision to interpret that the language mistakenly placed in the law shouldn’t change its intent, Teachers Retirement System spokesman Dave Urbanek said.

The court case, Johnson v. Retirement Board of the Policemen’s Annuity and Benefit Fund from 1986, said that when pension-related law is ambiguous, it “must be liberally construed in favor of the rights of the pensioner.”

“[That case] requires us to render all interpretations to the benefit of the member,” Urbanek told the AP. “We all agreed that that’s how we were going to interpret it.”

Now, after weeks of pushing lawmakers to change the language, the State Universities Retirement System says it agrees.

“I think it’s the right thing to do,” Mabe told The News-Gazette on Tuesday, adding that he hopes to have the problem solved by the end of the week.

A spokeswoman told The Associated Press that Mabe was not available for an interview Wednesday.

In a letter last week, House Speaker Michael Madigan urged the State Universities Retirement System to follow the interpretation of the law being used by the Teachers Retirement System.

Public universities and community colleges still say they could lose many employees to the pension-reform law. It was passed to help the state deal with a $100 billion shortfall in funding state retirement benefits. It cut cost-of-living increases for retirees and capped the amount of earnings that can be applied toward pensions.

But the language glitch threatened to push even more out of the door, the schools said. Lawmakers agree the wording was a mistake.

That concern, at least, appears to have been addressed, University of Illinois spokesman Jan Dennis said.

“It will help prevent people from leaving or retiring for that reason,” Dennis told the AP.

Legislation was already filed last week to change the pension-law language. State Sen. Chapin Rose has said he still plans to push his legislation, while state Rep. Chad Hays says he could do the same with his if needed.

But Hays said Wednesday he’s optimistic that the State Universities Retirement System’s new interpretation will fix the problem. His district includes part of the University of Illinois, but he said he was just as concerned about community colleges as he was about universities.

“When you look at our community college system, you would have the potential to have three or four of the top administrators (at some schools) leave in one fell swoop,” Hays said. “That could be the lion’s share of the senior leadership at an institution.”